Recently, well-known foreign food enterprises such as Nestle, Danone and Pepsi have adjusted their business strategies in China, shut down and transferred a number of production factories in first-tier cities, and implemented strategic transformation. The increasingly fierce local competition environment and shrinking consumer market are considered to be the main reasons why foreign food giants are forced to start strategic transformation.
According to industry insiders, the high cost of land and labor in first-tier cities forces foreign food enterprises to consider building factories in the central and western regions with relatively low costs.
Local enterprises squeeze profit margins.
As early as last year, the widely circulated Nestle production suspension event finally came to an end with a statement from Nestle. Nestle said in a statement that it will stop the ice cream retail business in East China and the production and operation of the Shanghai ice cream factory at the end of 20112. Almost at the same time, Danone also announced the closure of its yogurt production plant in Shanghai. It is rare for such a concentrated foreign food giant to adjust its business strategy in China in recent years, if we count that PepsiCo has packaged and sold 24 home improvement bottle factories that have been operating in the mainland for more than ten years.
In the statement, Nestle did not elaborate on the specific reasons for the closure of the factory. It only said, "Nestle is constantly evaluating the ice cream business and making corresponding adjustments to maintain the long-term development of this business." However, it is not difficult to find the answer from the data of market research. Faced with the strong occupation of the market by local enterprises, the profitability of the above-mentioned foreign-funded enterprises is gradually weakening.
20 1 1 year, the domestic ice cream business scale reached 30.675 billion yuan, an increase of 35. 19% in six years. But for Nestle, the market share in 20 1 year is only 3.2%, ranking fourth, lower than Unilever, which accounts for 7.4%, and far lower than the top two local brands Mengniu and Yili.
Some industry analysts believe that Nestle is obviously not an opponent of local enterprises who are good at cost and price war in the face of extremely dispersed market structure and rising production costs. "In the past few years, Nestle's ice cream business and Danone's yogurt business have been suppressed by local dairy giants." The industry analyst said.
After withdrawing from the joint venture with Guangming and Mengniu, Danone embarked on the road of sole proprietorship. But this model is obviously not a long-term solution. It is reported that Danone's operation in Guangzhou, Shanghai and other cities is not optimistic at present. Take Guangzhou as an example, because Danone has no production factory in Guangzhou, all its Biyou yogurts are transported from Beijing factory. Because the shelf life of yogurt is generally 14 days, it takes almost one week from long-distance transportation to shelf, which leads to high cost. In addition, Danone has to compete with local brands at the terminal, with almost no profit. Different from Guangzhou, Danone is one of the most expensive yogurt brands in Shanghai market. "Danone takes a high-end route in Shanghai, hoping to seek high efficiency in the case of a small market scale, but because it is a wholly-owned enterprise, its production efficiency and profitability are not strong." According to industry sources.
"According to Shanghai's Twelfth Five-Year Plan, all kinds of manufacturing enterprises including food production will be gradually marginalized in the future. Finding the right time to close the production plant in Shanghai and then transfer the factory to the central and western regions with relatively low costs will become a trend. " Some insiders even assert that first-tier cities such as Shanghai are no longer suitable for traditional manufacturing, and more and more production enterprises will "escape" in the future.
The cost of building factories in the central and western regions is low
Since the beginning of this year, Nestle has made frequent moves in China. It is reported that before Nestle closed the Shanghai ice cream factory, it had acquired 60% equity of Yinlu and 60% equity of Xu Fuji. Now it seems that this is undoubtedly a signal of its business strategy adjustment.
According to business people, in the past few years, private enterprises from the Yangtze River Delta, such as Zhejiang and Jiangsu, have purchased and reserved a large amount of land in first-tier cities along the East China coast, such as Shanghai. At present, it is difficult for production enterprises, especially those in traditional industries, to find a suitable land to invest and build factories in these places. "To some extent, the transformation of foreign-funded food enterprises is a forced response," said the industry insider.
Compared with the compressed market, the headache for foreign food enterprises is the rising comprehensive operating costs. Compared with the central and western regions, Shanghai and other coastal first-tier cities have less and less advantages in terms of employment, logistics, raw material procurement and water and electricity costs. According to statistics, in the first three quarters of this year, the average price of dairy products in Shanghai increased by 15% or 16.07 yuan per kilogram. In contrast, the national average price is only 15. 18 yuan. In addition, China began to implement the "two taxes in one", and the tax rates of domestic and foreign-funded enterprises were unified, and the foreign-funded enterprises increased by 15% compared with the previous 15%. This is equivalent to directly canceling the "super national treatment" enjoyed by foreign companies in the past.
"There is no land, which means that it is difficult for Nestle and Danone to expand production capacity and expand new factories. However, the continuous increase in operating costs and the tightening of fiscal and taxation policies in first-tier cities in East China such as Shanghai have made their operations more and more difficult. " According to industry sources.
"The current situation in the food industry is the transformation and upgrading of foreign food giants' past unbalanced development under the background of domestic regional industrial restructuring." An institutional analyst who has been engaged in FMCG research for a long time believes that on the one hand, it is to adjust the positioning and strategy of enterprise product categories, or transfer from high-cost coastal cities to low-cost surrounding areas or central and western regions, or optimize product structure and upgrade low-end products.
Some insiders believe that Nestle and Danone need to set up production points in several central cities in the future. If all your input costs are high, under the current mature brand conditions, it is not ruled out that you will take the way of OEM to dilute the costs. Another possibility is to build a factory in the midwest.
The cost of land and labor in first-tier cities is becoming less and less advantageous, and building factories in the central and western regions with relatively low costs will more effectively reduce the cost pressure. "The central and western regions still have considerable advantages in land resources. It can completely undertake a large number of manufacturing processing capacity transfer in the eastern region. If foreign-funded food enterprises can successfully transfer to the conditional central and western regions, they can extend the competitiveness of China's labor-intensive industries in the international market and promote the industrialization process in the central and western regions. " The industry insider said.